Question

Suppose that the market for milk is initially perfectly competitive. a) Draw a supply and demand...

Suppose that the market for milk is initially perfectly competitive.

a) Draw a supply and demand diagram showing the equilibrium quantity of milk produced and the market price. Be sure to label all part of your diagram.

b) On your diagram from Part (a), label the consumer and producer surplus.

c) Suppose that the government permits an industry association to form which issues production quotas to each dairy farmer. If the sum of the quotas are less than competitive market quantity, draw a new Supply and Demand diagram to show the effect of the quota on the market price.

d) On your diagram from Part (b), label the consumer and producer surplus. How have consumer and producer surplus changed as a result of the quota system?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume that the market for milk is initially perfectly competitive. 1. Draw a supply and demand...
Assume that the market for milk is initially perfectly competitive. 1. Draw a supply and demand diagram showing the equilibrium quantity of milk produced and the market price. Be sure to label all part of your diagram. 2. On your diagram from Part (a), label the consumer and producer surplus. 3. Suppose that the government permits an industry association to form which issues production quotas to each dairy farmer. If the sum of the quotas are less than competitive market...
The market for apples is perfectly competitive, with the market supply curve is given by P...
The market for apples is perfectly competitive, with the market supply curve is given by P = 1/8Q and the market demand curve is given by P = 40 – 1/2Q. a. Find the equilibrium price and quantity, and calculate the resulting consumer surplus and producer surplus. Indicate the consumer surplus and producer surplus on the demand and supply diagram. b. Suppose the government imposes a 10 dollars of sale tax on the consumer. What will the new market price...
Consider a perfectly competitive market with Market demand function: ?? = 1000 − 2? Market supply...
Consider a perfectly competitive market with Market demand function: ?? = 1000 − 2? Market supply function: ?? = 2? a. Suppose there is no sales tax. What is the equilibrium price and equilibrium quantity? What is the consumer surplus and producer surplus? b. Now suppose the government imposes a sales tax of $50 per unit on consumers. What is the new equilibrium price and equilibrium quantity? What is the new consumer surplus and producer surplus? What is the tax...
1. Perfectly Competitive Market Model a. Draw a diagram depicting the perfectly competitive market for aspirin....
1. Perfectly Competitive Market Model a. Draw a diagram depicting the perfectly competitive market for aspirin. b. Identify the equilibrium price and quantity. c. Define consumer surplus. Identify the area of consumer surplus of the graph, provide reference points, and label it.
Consider a perfectly competitive market with demand Q=1,000-4P. The marginal cost for each firm in the...
Consider a perfectly competitive market with demand Q=1,000-4P. The marginal cost for each firm in the market is constant at MC=4. Determine the competitive equilibrium price and quantity. . Graph demand, supply, and the equilibrium found in part A). Determine consumer surplus, producer surplus, and total surplus. Is consumer surplus or producer surplus equal to zero? Why or why not? Is this question representative of a long or short-run perfectly competitive market? How do you know?
Suppose a perfectly competitive market has the following inverse supply and demand curves: Supply: P= 5+2Q...
Suppose a perfectly competitive market has the following inverse supply and demand curves: Supply: P= 5+2Q Demand: P = 50-Q. 1) Solve for the perfectly competitive Pe and Qe, and calculate consumer+producer surplus at Pe, Qe.
Draw a supply and demand diagram showing the market equilibrium price and quantity. Now draw a...
Draw a supply and demand diagram showing the market equilibrium price and quantity. Now draw a diagram showing how a perfectly competitive firm might make a loss at this market price. Identify the firm’s quantity supplied, average total cost, and total losses. Finally, use the market supply and demand diagram to show what would happen to bring this market to long run competitive equilibrium.
Suppose the market for bottled water is competitive and is characterized by the following demand and...
Suppose the market for bottled water is competitive and is characterized by the following demand and supply conditions. The inverse demand and supply curves are depicted below. Demand: QD = 400 – 100 P Supply:    QS = 280 + 20 P (for P > 0) Price: Quantity: Consumer surplus: Producer surplus: Suppose in anticipation of an approaching hurricane, demand rises to QD = 800 – 100 P. What will happen in the market, including welfare effects, as measured by consumer...
The corn market is perfectly competitive, and the market supply and demand curves are given by...
The corn market is perfectly competitive, and the market supply and demand curves are given by the following equation: Qd =50,000,000 – 2,000,000 p Qs = 10,000,000 +5,500,000 p Where Qd and Qs are quantity demanded and quantity supplied measured in bushels, and P= price per bushel. 1) Determine consumer surplus at the equilibrium price and quantity.
(a) Draw a Supply Curve and the Demand Curve for the Milk market. Label the supply...
(a) Draw a Supply Curve and the Demand Curve for the Milk market. Label the supply S1 and the demand D1. Label the vertical axis P for Price and label the horizontal axis Q for Quantity of Milk. Label on the vertical axis the equilibrium price as P1. Label on the horizontal axis the equilibrium quantity as Q1. Assume now that the price of Breakfast Cereals has increased by 200%. (b) Would the Supply Curve for Milk increase, decrease or...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT